In FY March 2014, we achieved steady results in the introduction of new products, acceleration of our Monotsukuri Innovation, and the establishment of a global production footprint, as we pursued the Structural Reform Plan*1 toward FY March 2016. We have also been making solid progress in promoting global alliances.
In terms of products, we successfully introduced the new Axela/Mazda3 into global markets. It is the third vehicle (following the CX-5 and the Atenza/Mazda6) to incorporate SKYACTIV TECHNOLOGY and Mazda's new design theme,"KODO-Soul of Motion", both of which enjoy high acclaim worldwide.
On the production front, production of the new Mazda3 began at our new plant in Mexico in January 2014.
Through these efforts, for FY March 2014 the Mazda Group posted net sales of ¥2,692.2 billion, an increase of ¥487.0 billion year-on-year. The Company's operating income amounted to ¥182.1 billion, an increase of ¥128.2 billion year-on-year, with net income reaching ¥135.7 billion, an increase of ¥101.4 billion.
Further, we are making progress as scheduled in the construction of an engine machining plant in Mexico and a new transmission plant in Thailand. In Japan, work to increase our production capacity for SKYACTIV engines and transmissions is progressing as planned.

*1The Structural Reform Plan consists of the following four initiatives: 1. Business innovation by SKYACTIV TECHNOLOGY; 2. Accelerate further cost improvement through Monotsukuri Innovation; 3. Reinforce business in emerging countries and establish a global production footprint; and 4. Promote global alliances.

To fulfill our social responsibilities, it is important for Mazda to contribute to the development of local communities, as well as society in general, while striving for sustainable and profitable growth.
Moreover, regarding non-financial social responsibility mainly covered by this report, we consider that our Company has a wide range of stakeholders and varying challenges to be addressed. Mazda therefore divides its CSR initiatives into six areas.*2 In response to the changes in the business environment surrounding Mazda, the Company has started to review the key areas of its CSR initiatives. Meanwhile, in view of the seven core subjects related with ISO 26000, we have established targets by identifying the CSR perspectives inherent in the daily work of each employee, with each target item extracted from the business operation plans. This report presents the FY March 2014 results and evaluation, as well as the FY March 2015 targets. Also, we have been addressing global warming and other environmental problems, by setting further detailed annual targets in the Mazda Green Plan 2020. Going forward, we will remain committed to implementing the PDCA cycle to ensure continuous improvement, through establishing challenging targets and encouraging each individual employee to work toward achieving these goals.

As an automobile manufacturer, we believe that it is important for Mazda to contribute to realizing a sustainable society, particularly regarding environmental and safety performance, through its vehicles and technological innovations. In keeping with our long-term vision for technology development, called "Sustainable Zoom-Zoom", by providing all customers who purchase Mazda vehicles with driving pleasure as well as outstanding environmental and safety performance, we aim to be a brand that garners the ardent support of customers around the world.
On the environmental front, Mazda promotes the Building-Block Strategy, which prioritizes improvements in base technologies, such as improving the engine's thermal efficiency and reducing the weight of the vehicle body, and then gradually adds electric devices. Even in 2020, Mazda expects that the majority of vehicles will still be powered by the internal combustion engine. Consequently, Mazda is first working to achieve comprehensive improvements in the base technologies. Through this approach, rather than relying heavily on a small proportion of eco-friendly models, Mazda will contribute to the reduction of global CO2 emissions by delivering vehicles with excellent environmental performance at an affordable price to customers worldwide, including emerging countries, which may lack special infrastructure.

New Demio/Mazda2 (launched the market in autumn 2014)

We have already released three models equipped with the full range of SKYACTIV TECHNOLOGY, a term which covers all Mazda's innovative next-generation base technologies. The new Demio/Mazda2 featuring a newly developed small-displacement clean diesel engine will be rolled out in global markets starting from Japan in autumn 2014. This engine will ensure the new Demio/Mazda2 achieves the best test mode fuel economy figures*3 among vehicles in Japan powered by an internal combustion engine (excluding hybrids and micro-mini vehicles), as well as significantly improved day-to-day fuel economy. The number of SKYACTIV-equipped models will be further increased and we expect that sales of these models will account for over 85% of total sales volume by March 31, 2016, exceeding our initial plan.
In the realm of safety, Mazda's aim is to achieve a safe and accident-free automotive society from the three viewpoints of vehicles, people, and roads and infrastructure. Specifically, the Company carries out research and development into safety technologies based on the Mazda Proactive Safety philosophy, which particularly respects the driver, and has released vehicles featuring the full suite of Mazda's advanced safety technologies, known as "i-ACTIVSENSE" technologies.

*3Under Japan's JC08 test mode cycle

As a company with production sites in Hiroshima and Yamaguchi Prefectures, Japan, Mazda believes it has great responsibility for regional economy and employment. We will continue to sustain an 850,000-unit production level in Japan. This is crucial not only for making a continuing contribution to the growth of local communities, but also for helping the maturation of Japan's monotsukuri (manufacturing) technologies and their application to overseas production sites.
At the same time, in January 2014, production started in our new plant in Mexico, as the most important manufacturing site for our efforts to establish a global production footprint. In Mexico and all other countries where the Company conducts corporate activities, Mazda will follow the basic approach of growing with local communities and thereby fulfilling its social responsibility in a broader sense. Our efforts will include environmental protection, human resource development that values diversity, high quality maintenance, respect for human rights, and social contribution to local communities.

Since 2013, Mazda has promoted brand value management in earnest. Through this initiative, we aim to be a brand that enriches customers' lives and that maintains special bonds with those customers, through various touch points. We have stipulated Mazda's "Brand Philosophy", which all Mazda Group employees should follow, to clarify Mazda brand value and ensure that all employees will make consistent efforts.
In the course of advancing the ongoing Structural Reform Plan, we have revised our business indices for FY March 2016, in view of our initiatives for brand value management. Specifically, target operating profit has been upwardly revised to ¥230 billion (increased by ¥80 billion), while projected global sales volume has been set at 1.52 million units (reduced by 180,000 units), with the objectives of further strengthening emotional bonds between Mazda and individual customers and of steadily increasing the number of customers who support Mazda. Through these revisions, the Company will steadily advance the establishment of a foundation for future development, while balancing the increase in sales volume and our brand value maintenance and enhancement.
We will remain committed to valuing customer feedback and providing Mazda's unique and attractive products that satisfy the needs of our customers, even as they vary across more than 120 countries and regions. In this way, the Company seeks to achieve its objectives.

I value the word "cooperation." To ensure the Mazda Group's continuation and growth, it is important that all the people involved should work in cooperation with each other, sharing the same objectives and processes of achieving these objectives. The benefits of cooperation are particularly obvious when we take on a new challenge and I am certain that the development of SKYACTIV TECHNOLOGY and Monotsukuri Innovation are good examples of what we can achieve through cooperation. By taking advantage of "cooperation" as one of its great strengths, the Mazda Group will continue growing throughout the entire value chain.
Since our initiatives for brand value management have just begun, I know that that Mazda is still a long way from its intended vision. Mazda will celebrate the 100th anniversary of its founding in 2020, the year the Olympic Games are to be held in Tokyo, Japan. I hope that in that milestone year, Mazda will be fully recognized as a company gaining special favor with and sincere trust of its customers and other stakeholders around the world. To this end, I will intensify the concerted efforts of all Mazda Group companies. We will also be committed to realizing sustainable growth, in harmony with the earth and society.